Imposing Again

I’m feeling a lot less optimistic after the meetings this week between the NHL and the NHLPA. Gary Bettman did not respond positively to the NHLPA proposal – and by that I mean he did not soften the league position at all – so it is now clear that the league is on a path that was laid out years ago, about the time the ink on the last CBA was drying.

Gary Bettman today: “We think we’re paying too much in salaries… We want something close to what we envisioned eight years ago.”

(I can’t be surprised at this because the system that emerged in 2005 put the players squarely in the crosshairs for 2012. The NFL and NBA learned from the NHL lockout and all three leagues are sitting in the catbird seat. The idea that Gary Bettman and his cronies would put any value on labour peace at all was wishful thinking.)

The real problem, of course, is that Bettman is not afraid of any long term damage from a lockout. When asked about that today, he responded with “We recovered last time because we have the world’s greatest fans.” Gary crowed about this factor at a meeting in Boston earlier this year.

Revenues snapped back quickly for the league in 2005-06. There was a cost, of course, but that cost was quickly overwhelmed by the return. Bettman expects the same this time, and he is very probably right. Diehard fans – which includes pretty much everyone reading this blog – will suffer through the lockout but happily return when the games resume. Casual fans will hardly notice if the league doesn’t start on time. They don’t come on board until the playoff races begin to heat up anyway.

I’m sure the NFL and the NBA figured out football fans and basketball fans are just as great as hockey fans. The sports entertainment industry has decided that the baseball experience in 1994 was the outlier (and a big reason baseball has enjoyed labour peace ever since), not the norm.

The league imposed the 2005 CBA on the players and Gary believes – probably correctly – that he has the leverage to impose another one on the players in 2012. And that’s the plan.

Those who were hoping that the new NBC TV deal and the Winter Classic might provide pressure points on the league were also indulging in wishful thinking. Their hopes were dashed with the news that lockout protection was built into the contract with NBC. This is not surprising – one would expect a possible lockout would be part of the deal – but it is surprising to me that NBC is obligated to pay even if the entire season is cancelled. (Or maybe not, considering the relationship between Comcast and the Philadelphia Flyers.) Anyway, the league put together a $300 MM warchest in 2004. They don’t need it this year with the NBC payments.

The NFL stayed firmly on track and won. Likewise the NBA. Why would hockey proceed any differently now or in the future? Bettman isn’t negotiating.

He’s imposing again.

Postscript: Small mercies. At least Gary isn’t prominsing lower ticket prices or 30 competitive franchises in 30 healthy markets. The only promise is that the players are going to get a lot less money.

Comments

I am one of those fans who hates pretty much everything the NHL owners have done, and Im ok with losing a season of hockey to save a few grand from not having to pay for season tickets. But I will be back when the NHL resumes play.

Still, I am mildly surprised the NHL has shown so little interest in the PR battle. Bettman coming out and saying “the players get too much” sounds anti-player. But it wouldnt be hard for the NHL to turn that anti-player sentiment around and say “”the players get too much and that’s why we couldn’t reduce ticket prices after the last lockout.” Sure, it would be BS. But to not plat the PR game at all is still surprising.

My sense of the NFL lockout is that the owners, while perhaps not blinking, at the very least seemed to move significantly off their original position. Yes, they got some concessions from the players, but it struck me that the NFL was ultimately prepared to take half a loaf, so to speak, rather than blow away a significant chunk of the season.

My read of NHL owners right now is similar. Yes, they have a heavy wish list, but I think a majority of them would take some gains and a full season as opposed to the uncertainty of a lengthy lockout. I think Bettman’s claims that the League could withstand another lengthy lockout is designed simply to shake a few more concessions loose from the players. After all, Allan Walsh said today on Twitter, “I have no words” when informed of Bettman’s comments. That’s exactly the reaction Bettman wants. He wants and needs the ‘PA to think that he is just brassy/crazy enough to do it again.

The league gets paid and the year’s rights get flipped to the end of the TV deal for no rights fee. This is a license to bargain in bad faith and Fehr should file an action with the NLRB immediately on 9/15. with the imposition of the lockout. Also fans should stop being naive. Player costs don’t affect ticket prices, supply and demand affects ticket prices. Bettman’s comment on that were bald-faced lies. If the fans don’t want to get played for saps every time and taken for granted every time, then they should do what I plan to do en masse. BOYCOTT the NHL. Screw Bettman, don’t go to games when they return, don’t buy Center Ice or the Gamecenter. Spend your money on something else. I intend to cancel my ticket with the first cancelled game and sure for a refund if need be and get the sheriff to enforce the judgment. I’ll watch Barclay’s Premier League Football instead. We do have a club if we have the stones to band together and use it.

Tom, I wrote a piece the other day musing about a possible interim solution here for the players, here’s a quick excerpt:

I’m not really expecting to see a deal prior to September 15th, but I have been wondering if there might be a way to play out the 2012/13 season while negotiations continue. The two sides are really only arguing about the money sandwiched between the owners proposal of ~43% (with current HRR definition) and the 57% the players are willing to play for. So, why not lock that 14% of revenue into an escrow account, to be distributed once a deal is made? Keep negotiating throughout the season and actually play the games. In this theoretical agreement**, the teams would continue to pay all the salary currently due to their players, but only ~75% of it would actually go the players – the remainder going into the newly created escrow account, to be dealt with upon the creation of a new CBA.

I get into it in a bit more detail in the post*, but the problem here, for the owners, would seem to be the leverage they’d lose from the players making even 43% in the interim. My question for you is, say the players were willing to play for 20% of HRR until the deal is struck, with the remaining 37% held in escrow until a deal is struck. Does that provide enough leverage to the owners for them to make that type of interim deal?

It’s an interesting idea, Speeds, but I don’t think anything except the NHLPA signature on Gary’s new improved CBA will prevent a lockout. Making the players sit is perfect leverage. It is what will get the owners the most money. I don’t believe they will be swayed from their plan.

The worst that happens if the NHLPA makes that sort of proposal (assuming no deal before the time they might make such an offer) is that the NHL would say no, and the NHLPA would likely look better in the court of public opinion (to the extent that matters, probably not a lot but who knows?)

Taking it one step further, what if the players said they’d play for literally no salary (with the owners still putting 57% into escrow) until a deal is reached. I don’t know the NHLPA would agree to that, but making no money while playing isn’t much worse than making no money while not playing, especially assuming they end up getting the money down the line that they’d have lost if they don’t play and 30 games are missed. I suppose they’d lose whatever immediate money they would have made by playing in the AHL or Europe, but at the same time they’d be gaining the money previously mentioned.

“Tom Benjamin’s earlier cautious optimism has declined following the outcome of the recent unproductive CBA talks, as the league apparently is willing to endure another lockout to squeeze the players for more because they know the fans will return” –Agree.

I don’t know, Tom. I know I’m as diehard a fan as anyone here but I don’t feel as desperate for my hockey fix this time as I did during the last lockout. I knew I was right in thinking that the system they wanted wasn’t going to really fix the core problems, but I suppose a part of me hoped I was wrong. If I was going to continue to be a fan, I wanted the league to prosper. Maybe, just maybe, the new system would help those weaker teams and we wouldn’t have to go through this again.

You see, I think we came back because we thought we were done. No more lockouts, at least for the foreseeable future. Now with the realization that the NHL just wants to ratchet down HRR every 5 yrs or so does give one pause. Do I want to support a product where it’s such a blatant money grab every few years, where you ignore your customers and don’t think twice about shutting everything down? Having to re-start every five years isn’t really what I want out of this entertainment business. I want uninterrupted entertainment, not a league that makes its economic issues the entertainment every five years.

I’m wondering if snafu is right. Last time around, I did see the basis for owner unrest, and the “need” for cost uncertainty. Of course it was really all about money – but the owners were demanding a system that had a semi-coherent economic model at its centre.

This time, I just see a grab for my wallet.

I told my 2 boys last night that we’d probably not go see any NHL games this year, but we’d pick up a bunch of OHL games instead. They were happy with the trade-off.

If snafu and I are outliers, nothing changes. If we’re a sizable minority, maybe there will be some fall-out. If it happened to America’s pastime, could happen to hockey, too. I’m skeptical about the potential for a consumer revolt, but look at me: I’m no radical. If I’m pissed off enough to make this decision this early – and get the kids’ buy-in – maybe it’s a possibility. Maybe Bettman and the owners similarly discount the potential for consumer dissatisfaction with their behaviour. Maybe they are wrong.

I’ve kind of hoped for the same thing, but 1) most fans think the players are paid too much, too, and 2) the owners believe they are right which is what is driving their strategy.

If the fans show their dissatisfaction by sitting on the wallets, it will impact them next time, but they have to learn their lesson first.

The point that might be being missed is that the league has the support of the corporations. How many tickets do they buy? The fan is the source of all the money, of course, but that’s often indirect. I haven’t spent any cash on hockey since 2004, but I still watch on TV which gives money to the league both through the TV contracts and through the sponsors who pay for my eyeballs on the board advertising.

Unfortunately, the teams that suffer the most from fan apathy are the ones that can afford to suffer the least. Toronto and MSG can rely on a steady stream of high-paying ticket buyers, even with repeated lockouts. Phoenix and Florida…not so much So you have small revenue markets becoming even *more* reliant on the big revenue markets when this happens…which just gives the big markets more powerful in the intra-league negotiations.

A different result may come into play if the TV networks stood up and told the NHL to take a hike if these lockouts repeat…but that doesnt seem to be a factor, at least this year.

You see, I think we came back because we thought we were done. No more lockouts, at least for the foreseeable future. Now with the realization that the NHL just wants to ratchet down HRR every 5 yrs or so does give one pause. Do I want to support a product where it’s such a blatant money grab every few years, where you ignore your customers and don’t think twice about shutting everything down? Having to re-start every five years isn’t really what I want out of this entertainment business. I want uninterrupted entertainment, not a league that makes its economic issues the entertainment every five years.

I think this is a really good point, and I think precisely why this is one issue that both the NFL and NFLPA and the NBA and NBAPA could find common ground.

The NHL will want a very long contract – 10 years – because they know that fans will get tired of a dispute every five years. They are going for a whopping cut every ten years rather than a smaller cut every five years. They are playing a very long game here.

Today’s players also want ten years just so they don’t get rolled over again.

[…] CANUCKS CORNER: Tom Benjamin’s earlier cautious optimism has declined following the outcome of the recent unproductive CBA talks, as the league apparently is willing to endure another lockout to squeeze the players for more because they know the fans will return. […]

[…] As blogger Tom Benjamin pointed out, those who thought league’s new deal with NBC and The Winter Classic “might provide pressure points upon the league were also indulging in wishful thinking”, as it has lockout protection built into those contracts ensuring they get their money regardless of a work stoppage. […]